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iBeacon; uBeacon - This Retailer Knows Exactly Where You Are

On the eve of Valentine’s Day, one fashion retailer is expanding a program to deliver customers deals to their smartphones. Jewelry and gift retailer Alex & Ani LLC is using in-store wireless technology based on Apple Inc.AAPL -0.08%’s iBeacon location-aware protocol to engage with smartphone-carrying shoppers.

Using location-based marketing, Alex & Ani is trying to tackle a challenge that confounds many young retailers today: Getting new customers to visit their stores instead of the large, established retailers. The company, which generated $230 million in sales last year, is getting help from an Apple technology retailers hope may make it easier to add a new, mobile dimension to in-store engagement with customers.

The idea, said Ryan Bonifacino, vice president of digital strategy, is getting people who might otherwise not be familiar with the brand into Alex & Ani stores. The business has installed sensors outfitted with iBeacon, a location-sensing transmission protocol released by Apple last year, across its 40 stores. The technology uses a version of Bluetooth, a form of wireless close-range communication, that senses nearby Bluetooth-enabled devices, such as smartphones carried by shoppers nearby or in a store. Alex & Ani is using iBeacon in conjunction with a marketing and advertising platform from Swirl Networks Inc. The iBeacon boxes can detect iOS and Android smartphones loaded with Swirl, at a maximum range of 300 feet. When Swirl users who have agreed, via opt- in, to receive deals from Swirl’s retail partners pass near an Alex & Ani store, the app sends information about the store’s products and a discount offer to the smartphone.

In pilot tests at its Boston and New York City stores from May to July last year, Alex & Ani found that more than 75% of shoppers viewed the company’s content and associated offer — 20% off of a bracelet. Fifty percent of those smartphone users redeemed the offer. Although Mr. Bonifacino declined to say how many people made a purchase, he said it was enough to encourage the retailer to expand the program to all of its stores.

With Alex & Ani supporting Swirl in its 40 stores, Swirl CEO Hilmi Ozguc said he expects the software will build a rich profile of customers’ purchasing behavior. This information includes customers’ gender, what they like to purchase and with what frequency, as well as clues on customers’ purchase intent based on how long they spent in a store, and in which aisle. Retailers use Swirl’s cloud software to set promotional parameters based on how often Swirl app users come close to a store. For example, a man who returned to a section twice, or spent more than a couple minutes there, could get a coupon prompting him to purchase a product. Mr. Ozguc said the goal is to make people offers within the context of their shopping experience.

“I like the idea of real-time mobile marketing but it’s still ahead of its time,” said Sucharita Mulpuru, a retail analyst at Forrester Research Inc.FORR -1.67% But Ms. Mulpuru added that most consumers aren’t yet using their phones to browse and shop in stores, and fewer have downloaded apps for location-based targeting.

Mr. Ozguc said iBeacon adoption remains low largely because it is so new; Apple first included the technology in its iOS 7 software last year, before launching it across its 254 U.S. stores in December. He said adoption by Alex & Ani, as well as by American Eagle OutfittersAEO +1.10%, Macy's Inc.M +0.49%, Kenneth Cole Productions Inc. and Timberland Co. before it, should boost awareness of the technology. “Being able to detect someone with a high degree of accuracy and certainty inside a store, opens the door for a bunch of things,” Mr. Ozguc said.

The iBeacon-Bluetooth combination is the latest in a line of location-sensing technologies the retail industry has tried. Mr. Ozguc said GPS proved unreliable because it relies on satellite signals, which failed to properly penetrate store walls. Some stores found Wi-Fi clunky because it requires too many routers and cables to maintain a persistent signal.

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